Energy professionals discussed a brighter side to the current down cycle as a time to focus on being bold and strategic during an IHS CERAWeek session Monday afternoon. The session focusing on sustaining innovation through the cycle featured speakers Steve Bolze, president and CEO of GE Power & Water; Muhammad Al-Saggaf, acting head of shared operations and services with Saudi Aramco; and Shaikh Nawaf S. Al-Sabah, CEO of Kuwait Foreign Petroleum Exploration Company (KUFPEC).
Al-Sabah referred to the current state of the oil and gas industry as the “new normal,” which is a period when commodity prices will remain relatively weak for the next few reported financial cycles.
Innovation is key when dealing with the new normal.
“You have to maintain your investment and focus on your long-term purpose, but you must focus in on three key things: being bolder, faster and smarter,” said Bolze.
Al-Saggaf echoed those sentiments and raised the question whether or not innovation is optional or if it’s required during a down cycle.
“Innovation is not an option; it’s a requirement for success and the survival of an organization,” Al-Saggaf said.
Al-Saggaf identified five characteristics he said are necessary to be innovative during the industry downturn:
- Tenacity: “Tenacity and perseverance is the opposite of giving up. You can’t be a hero today and a coward tomorrow.”
- Boldness: “This is very critical in innovation. You have to have big dreams. If your dreams are mediocre, then they’re not worth pursuing.”
- Collaboration: “This is one of the most fundamental elements of innovation, but collaboration tends to suffer in a down cycle because it’s one of the easiest things to cut. However, it’s important to sustain collaborations as a way of showing credibility, maintaining bridges and creating future opportunities.”
- Diversity: “Diversity is needed because to be able to describe any object, you must fully illuminate and look at it from different perspectives and different sides. You cannot afford to look at things in a homogenous manner if you are going to be innovative. Diversity is the foundation of creativity in business and creativity is extremely important to innovation in business.”
- Vitality: “We must combine vitality with experience. We can turn off the youth from joining our industry if we do not embrace young talent. Some organizations are trigger happy – too quick to lay off – and that sours their relationship with the youth. We may give a negative image of the energy industry, one that is undeserved and incorrect. For example, the industry may portray men and women on rigs, dirty and covered in mud, rather than show them collaborating together in large rooms to solve complicated problems with innovative ideas and technology.”
Saudi Aramaco increases its research budgets each year, Al-Saggaf shared. It steers away from layoffs during down cycles, and instead, has established nine research and innovation centers across the globe, Al-Saggaf added. There are three in the United States: one in Boston, Mass; one in Detroit, Mich. and one in Houston, TX.